China and the United States' Push for Technological and Economic Self-Sufficiency (Episode 3)

By Eliana Svilik

07/29/21

As we well know, China and the U.S. are the world’s two largest economies and both hold an enormous amount of political power as a result of their wealth and their large, advanced militaries. This has led to some friction between the two nations, further driven by their differing core ideologies. Recently, both states have taken steps to extricate themselves from dependency on each other and the world economy, with the goal of becoming more self-sufficient, particularly technologically.

China’s Made-in-China 2025 “MIC” plan, which was launched in 2015, encapsulates many different aspects of China’s push towards self-sufficiency. It aims to strengthen China’s position as an efficient manufacturer, particularly of new and developing technologies, which are crucial to China’s goal of becoming the next superpower. China’s list of technologies it wishes to spotlight is relatively similar to the U.S.’s, with industries such as next-gen information technology, energy equipment, high-end computerized machines and robots, agricultural machines, aerospace, maritime equipment and high-tech ships, advanced railway transportation equipment, new materials, new energy and energy-saving vehicles, and biopharma and high-tech medical devices. The plan also puts a major focus on innovation, as China seeks to overcome its long-standing trouble with creating the technologies it manufactures. These two objectives aim to decrease China’s reliance on foreign companies and IP, as well as move China up the economic value chain. China intends to achieve these goals through several different strategies, most of which rely on Beijing increasing its monetary injections into these industries, investing in research and development, and securing foreign IP until China begins to invent its own. In 2018, three years after the plan was publicized and launched, around 1,800 government guided funds, essentially specific government subsidies, were linked to MIC and cumulatively valued at $426B. 2018 was also around the year that the Chinese government became very quiet about MIC and forbid the Chinese press from reporting on it. This was done in response to Donald Trump’s aggressive opposition to the plan, which was one of the catalysts for the trade war (which we have covered in prior episodes of this podcast).

In addition to domestic actions, both China and the U.S. are using their political power and alliances to help them win this race. China has no real, dependable allies – save for perhaps North Korea. It does work with other countries, such as Russia, when interests coincide, but there is no trust. China also maintains “friends” that it funds or supports, though these countries are generally too small or weak to pose real threats. China’s lack of international alliances when compared with the United States, which has much of Western Europe and many key countries in the Indo-Pacific on its side, led China to launch its Belt and Roads Initiative in 2013. The Belt and Roads Initiative or “BRI” was marketed by China as a modern-day Silk Road meant to reignite trade alliances and routes. Despite its name, the BRI does not follow the historical Silk Road, but is instead a global initiative focused on infrastructure partnerships. Through the BRI, China finances infrastructure development for some 140 participating countries across the globe. Western countries have generally opposed the Belt and Roads Initiative, saying that China’s actions will result in countries overly debt-burdened. With relation to the technology war, the BRI gives China influence over a multitude of states across the globe.